Yesterday's big bounce on Wall Street didn't stick.
Stocks were deep in the red Tuesday and investors saw another day of sizable price swings after a long period of calm due in large part to a steep slide in oil prices amid a cut in crude demand and continued angst over U.S. interest rate policy.
The Dow Jones industrial average fell 258 points, or 1.4%, to 18,066 after rallying nearly 240 points Monday following Friday's nearly 400-point decline. The broad Standard & Poor's 500 stock index was also deeply in the red, falling 1.5% to 2127. The Nasdaq composite was down 1.1% to 5155.
Today's stock market slide follows a downgrade of daily crude demand for 2016 and next year by the International Energy Agency (IEA). The IEA lowered its demand estimates by 100,000 barrels a day this year and by roughly 200,000 daily barrels in 2017. The IEA cited "wobbling" Asian demand as one reason for slashing its forecast. "Stocks are red as U.S. assets are not continuing their bounce from yesterday," Bespoke Investment Group told clients in an early morning note, citing the IEA's view that "crude supply (will) persist well into 2017" as one catalyst for today's selloff.
The price of U.S.-produced crude fell, dropping $1.39, or 3%, to $44.90 a barrel.
For the past few trading sessions, stocks have careened down and up based on Federal Reserve commentary related to the timing of the Fed's next interest rate hike. On Friday, market calm was shattered and stocks suffered their worst one-day decline since late June after a Fed official made the case for a rate hike next Wednesday at the Fed's next meeting. That big decline was cut in half Monday when another Fed official said the the U.S. central bank should exercise "prudence" when weighing the next rate hike and stressed that a "preemptive" rate increase is "less compelling." "I think this is a continuation of what we saw last Friday, the possibility that central bank policy might not be as large a tailwind for stocks going forward," Bill Hornbarger, chief investment strategist at Moneta Group, told USA TODAY.
Stocks, which went a long stretch this summer without suffering moves of plus or minus 1%, have now suffered two straight days of outsized moves in the S&P 500, including a 1.47% rise Monday after a 2.45% decline Friday.
After the quiet summer, Wall Street pros said the market was vulnerable to a pullback, as investor complacency was rising at the same time the stock market valuation was moving into overvalued territory despite four straight quarters of contracting proft growth for companies in the S&P 500.
"A pickup in volatility is likely here to stay for awhile," Liz Ann Sonders, chief investment strategist at Charles Scwhab, told clients in a report released today.
In individual stock news, shares of Wells Fargo (WFC) were down 3.3% after the bank said it would end product sales goals targets for its retail bankers, just days after paying $185 million to settle charges that it gave employees the go ahead to open deposit and credit card accounts without telling customers as a way to meet sales objectives. Stocks were lower in Europe, with shares of the DAX index in German down 0.4% and the CAC 40 in Paris off 1.2%.
Asian equity markets also had mixed results, with blue chip stocks in Japan rising 0.3% but shares in Hong Kong's Hang Seng index sinnking 0.3%.